''Under a negative system, anyone may practise as an estate agent provided he follows the regulations prescribing the obligations for estate agents.

''He will be disqualified from further practising only when he breaches the provisions,'' he said.

Mr Mak said the industry should be given time to improve itself before positive licensing was introduced.

But the proposal was rejected by legislator Albert Chan Wai-yip, whose motion calling on the administration to regulate the industry through a licensing system received unanimous support in the legislature.

He described the plan as a delaying tactic.

Mr Mak said that since a negative system did not require the issuing of licences, it would be simpler to administer and would cost less than a positive system.

A positive system might screen out a significant portion of practising agents who were not qualified by professional competence and education, said Mr Mak.

He added that the Government would continue to consult relevant parties on the details of a possible regulatory system, including a clear definition of the level of professional competence.

He said the role of an estate agent would also be more clearly defined to avoid a possible conflict of roles. The Government would look at whether an estate agent should be allowed to act as an intermediary between sellers and buyers, or whether he should represent only one party's interests.

Most agencies mediated between the two parties in price negotiations and earned commission from both sides.

''Strictly speaking, an agent should act for one principal party,'' he said.

''Some commentators are uncomfortable with the split loyalty.'' Funds for the licensing system would come either from a charge on the licensee or from the Government.

''All this will take time. It would be useful, if in the meantime, practising estate agents could promote self-regulation and improve their service, thus paving the way for a possible licensing system in future,'' he said.

Society of Hongkong Real Estate Agents chairman Michael Choi Ngai-min said negative licensing was acceptable as a temporary measure, but a positive system was essential in the long term to ensure the development of a properly trained profession.

He said he believed the Government appeared to be opting for the easy way out by controlling conduct, instead of acting to improve standards.

Without a full licensing system there was no incentive to study or improve the quality and standard of service, he said.

Mr Choi said the industry had foundation and certificate courses organised in conjunction with City Polytechnic. However, he called on the Government to support the drive for professional training.

Moving the motion, United Democrat Mr Chan said buyers should be protected by the law and shielded from unscrupulous agents.

The Government's reasons for not introducing laws to regulate real estate agents were unconvincing. Britain, the United States, Australia and Japan had a licensing system, he said.

It was not enough to rely on the two real estate associations to regulate the industry because they represented only 30 per cent of the agents and lacked ways to punish those who broke the rules.

Mr Chan proposed examinations to ensure agents had sufficient knowledge on finance, property and law.

His colleague Selina Chow Liang Shuk-yee said that when self-regulation had proved not to work, it was up to the Government to take action. There was an urgent need to stamp out malpractice.

Frederick Fung Kin-kee said self-regulation was a pretext used by the Government to avoid responsibility.

The tourism industry representative in the council, Howard Young, said real estate agents should follow the example of his industry and set up a body to improve standards.